2013 saw a 12.4 point improvement in the loss and loss-adjustment expense ratio over the prior year, mainly due to the lack of any major, outsize property loss. The 2012 results were driven largely by Superstorm Sandy.
Underwriting expenses also improved to a five-year low in 2013. AM Best noted that captives’ expenses are normally lower than conventional insurance markets, primarily because they have lower overhead and associated expenses, and most, if not all of them, do not rely heavily on items such as agents’ commissions.
Best said it believes it to be common knowledge that, given the majority of single-parent captives use loan-back instruments with their parents, that captives’ investment portfolios tend to be significantly more conservative, and therefore generate less income, than typical investment portfolios for commercial companies.
Captive insurance, A.M. Best, property, marine, workers comp, captives